WB grants PH $500-M credit line for disaster risk reduction programs
THE WORLD Bank has approved another $500-million credit line for the Philippines, in which the government can dip when preparing for or responding to natural disasters.
In a statement on Wednesday, the Washington-based multilateral lender said its board of executive directors on Dec. 22 gave the go-ahead for the Second Disaster Risk Management Development Policy Loan with a Catastrophe-Deferred Drawdown Option (CAT-DDO 2) to the Philippines to “strengthen investment planning and regulations to reduce disaster risks and help manage the financial impacts when disasters strike.”
In 2011, the World Bank approved the first CAT-DDO also worth $500 million, the first of its kind of liquidity facility in the Asia-Pacific region.
“CAT-DDO 2 gives the Philippines flexibility to use the funds as needed. The drawdown period is three years and renewable up to four times for a total of 15 years. Amounts repaid during the drawdown period are available for subsequent withdrawal,” the World Bank said.
According to the World Bank, this financing option can be accessed “following a ‘state of calamity’ declared by the President.”
“This second CAT-DDO will provide the government with a platform for sustaining reforms and effectively implementing the country’s disaster risk reduction and management program,” it added.
“This new operation signifies the World Bank’s recognition of the Philippines’ comprehensive efforts to strengthen the country’s capacity for managing disaster risks. If not managed well, disasters can roll back years of development gains and plunge millions of people into poverty. Disasters can induce and exacerbate poverty through the loss of lives, destruction of assets, disruption of economic activities and trade, and indirect impacts on health, mobility, gender equality, and access to education,” said World Bank country director Motoo Konishi.
“The Philippines is among the most vulnerable countries in the world. Together, the 20 most vulnerable countries face escalating losses of $44.9 billion due to climate-related natural disasters alone. Inaction is set to cost us even more. With the number set to multiply almost 10-fold by 2030, amounting to $418 billion, we turn to innovative financing mechanisms to boost our resilience,” Finance Secretary Cesar V. Purisima said.
“Financial shocks caused by natural disasters undermine economic growth and poverty reduction. Governments need to be agile in mobilizing resources if we are to break free from disaster-traps that knock back the poorest and most vulnerable,” Purisima added.
For instance, the World Bank noted that the onslaught of Supertyphoon “Yolanda” (international name: Haiyan) in 2013 slashed 0.9 percent from the gross domestic product growth that year, on top of another 0.3-percent cut the following year.
The extensive damage also resulted into 2.3 million Filipinos falling below the poverty line, especially those in affected areas.
